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make the activities profitable, more indicative of someone
preparing for IRS examination than someone with the actual and
honest objective of making a profit. Accordingly, we find this
factor to favor respondent.
2. The Expertise of the Taxpayer or the Taxpayer’s Advisers
Efforts to gain experience, a willingness to follow expert
advice, and preparation for an activity by extensive study of its
practices may indicate that a taxpayer has a profit objective.
Sec. 1.183-2(b)(2), Income Tax Regs. A taxpayer’s failure to
obtain expertise in the economics of an activity indicates that
he or she lacks a profit objective. Burger v. Commissioner, 809
F.2d 355, 359 (7th Cir. 1987), affg. T.C. Memo. 1985-523; Golanty
v. Commissioner, 72 T.C. at 432.
Mrs. Smith maintains that before deciding to sell for a
company she would meet with representatives of the company,
sample its products, and tour its facilities. Mrs. Smith also
maintains that she contacted the Better Business Bureau and the
Direct Selling Association and that as a result of this
preparation she decided not to sell for certain companies. Mrs.
Smith further argues that she sought and followed business advice
from her upline distributor, Ms. Walsh, as well as her
accountant, Ms. Clark.
We find that Mrs. Smith’s preparation for her direct
marketing activities is not suggestive of someone trying to make
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